China’s Real Estate Crisis Could Be Over!
Hong Kong, Nov 14 (IANS) Chinese authorities are undertaking their most concerted attempt yet to address a catastrophe in the country’s massive real estate industry, which has depended heavily on the economy in recent months, according to media sources.
Shares of China’s largest property developer Country Garden rose as high as 52% in Hong Kong on Friday following Beijing revealed a 16-point plan that dramatically eases a restriction on financing to the sector, according to CNN.
Enabling banks to prolong maturing loans to developers, encouraging property sales by lowering down payments and mortgage rates, strengthening other funding channels like as bond issuance, and assuring the delivery of pre-sold houses to customers are key steps.
According to Larry Hu, chief China economist for Macquarie Group, “in essence, officials encouraged banks to do their utmost to boost the property industry.”
Tao Wang, the chief China economist at UBS, called the set of measures a “watershed moment” for China’s real estate market. She estimates that it, along with other initiatives revealed earlier this year, may pour more than 1 trillion yuan ($142 billion) into real estate.
On Monday, Chinese developers listed in Hong Kong rose 11% on average, propelling the overall market higher. Longfor Properties, another leading developer, increased by 17%, while Dexin China, an Hangzhou-based developer, increased by 151%.
Numerous observers believe the bailout package is the strongest signal yet from Chinese authorities that a two-year crackdown on the industry has ended. According to CNN, the government began attempting to reign in capital outflows by developers in August 2020 in order to contain rising property prices.
Evergrande, the country’s second-largest developer, defaulted on its loan last year, exacerbating the situation. As the real estate market plummeted, numerous significant corporations sought protection from their creditors. Due to the funding shortage, numerous pre-sold home projects around the country were postponed or halted.
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